I Need to Work Until Age of 67; I am Glad

Real Estate Agent with Chou's Realty

If god permits, I will have to work until the age of 66 and 8 months before I can claim my full benefits from Social Security. In fact, I will also need to save at least 20% of my annual income from now on, if I am to retire at 67. If there is any interruption of my earnings due to health issues or accidents, I will have to cut back on my expected quality of life during my retirement years. Of course, this is only a very rough guesstimate based on some assumptions such as 4% inflation and earning increase. My small retirement egg will need to grow at around 6% after tax every year. I am turning 50 next month.

Why am I telling you all these? I just want to tell you my mistakes so that you don't have to repeat them. Yes, I am talking about retirement planning. For all these years I don't really think too much about retirement planning until the mid-life crisis hit me lately. Today I finally sat down and spent the whole afternoon to figure out how much money I think I would need in order to live beyond my active career. I must say that it is an eye-opening and awakening experience for me. Here are the biggest mistakes I made:

1. Not to start the retirement planning earlier - I should have done that at least 15 years ago - although it's not too late now but I have less options. It's always a good practice to have roadmap so that you can put things in perspectives.

2. It doesn't matter how much you make. What counts is how much you save. If you start early, a small saving each year goes a long way.

3. Invest long term - I used to speculate in the stock market with a short-term mentality. Not only that I didn't make money because I am not a smart speculator, but also that I had forgone the capital that would have worked towards my retirement. Unless you are among the few who "know" how to beat the market, you'd be better off invest for the long term, rather than speculate for the short term.

4. Counting on too many good things - I used to spend money on things I don't really need. The usual justification is that "I'll make it back by selling one more house". Without a retirement plan, I didn't really understand that my decisions today are going to impact tremendously on the quality of my retirement. Also, I had been counting on my good health. Now that I am getting older, I need to be more realistic and plan for the rainy days.

As a nation, we have a notoriously low savings rate and rely too much on social security and credit cards. I am glad that I finally come to face my retirement issues. I hope you do too. It's never too early or too late.


Comments (1)

Debbie Malone
Londeree's Real Estate & Property Management - Lynchburg, VA
From Lynchburg To The Lake (434) 546-0369
Steve, you're wise to be putting so much thought into retirement. My husband contributes the maximum to his 401K. It's never too early to save.
Mar 09, 2008 02:50 PM